insight magazine

CFO: Mission Possible?

Increasingly tasked with being all things to all people, today’s CFOs are being asked to make the impossible possible. By Carolyn Kmet | Summer 2017

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The last decade has forcefully redefined the role of the chief financial officer (CFO) from a shadowed back-office numbers-cruncher into a power figure whose presence and influence permeates the entire organization.

To little surprise, 85 percent of CFOs surveyed by Robert Half Finance & Accounting say their roles have expanded outside of traditional accounting and finance over the past few years, with human resources and information technology as two of the most commonly cited new areas.

Which begs the question: Is pushing and pulling CFOs away from focusing only on mission-critical finance functions in the best interest of the business world? Or, perhaps it doesn’t matter—right or wrong, this is the new norm.

“The CFO role has evolved from being the scorekeeper to being a trusted business partner,” explains Ken Hager, who experienced the evolution of the modern CFO firsthand as he helmed the CFO role at DST Systems Inc. from 1988 until retiring in 2014. “Effective CFOs need to understand not only the financial dynamics of the business, but also the business itself, the markets served, and all of the challenges facing businesses ahead.”

If that’s not enough, the CFO’s purview now extends beyond internal operations, too. Today, it’s common to see CFOs at the forefront of representing their organizations to customers and clients, consultants and advisors, and stakeholders, shareholders, and investors alike. Which, as Jason Heath, CFO of Leadpages and former CFO of Media Temple, says, requires today’s current and prospective CFOs to develop “a deep understanding of the customer and what challenges they face.”

What’s accelerating this endless evolution is our increasing reliance on technology and data in driving decision making.

“Today’s CFOs have access to information about the details of resource consumption and the efficiency of invested capital that empowers them to be more proactive, and also more concerned about the entire spectrum of company performance and not just financial results,” says Ian Charles, CFO of Host Analytics. “It’s expected that today’s CFO will deliver strategic, data-driven guidance and apply critical thinking to decisions across the organization.”

“This oversight of all aspects of the organization has turned today’s CFO into a strategic partner for the CEO and not just a bean counter,” Charles continues. “Now the CEO is empowered with a valuable partner who is armed with data that allows for accurate, quick, and insightful business decisions.”

The truly successful CFOs, however, will be those that embrace these expectations and continue to evolve, both personally and professionally, to meet them.

Role With It

“Now, successful CFOs must be adept at navigating not only technical accounting, but also human resources, risk management, developing and monitoring key performance indicators (KPIs) for operations, and constantly worrying and planning for what’s next,” says Matthew Hinson, CPA, principal at Live Oak Advisors, who points to the demands of middle-market and private companies as big drivers of the continually evolving CFO role.

With this increased exposure and reach into functions beyond traditional corporate accounting and finance comes the opportunity and responsibility to guide, advise, and inspire departments across an entire organization.

“Modern CFOs are expected to deliver strategic guidance that will positively impact the company’s bottom line,” explains John Sadofsky, director of permanent placement services for Chicago-based Robert Half Finance & Accounting.

For example, Sadofsky says CFOs are increasingly collaborating with HR to contribute to decisions aimed at attracting and retaining the best talent—while also spending efficiently and effectively on that talent. Not only do these decisions impact an organization’s bottom line, they play a key role in managing risks in an increasingly competitive business environment.

Hager explains that the current emphasis on risk management across all business functions is requiring CFOs to gather and assess both quantitative and qualitative metrics in order to generate a holistic view of organizational performance.

While developing risk management strategies has always been a traditional expectation of CFOs, Heath says that today’s leading finance officers must take it a step further. “The CFO must develop strategies that objectively hold departments accountable to their results, while at the same time encouraging, allowing, and assisting teams to take risks and invest in new business ideas that ultimately drive growth,” Heath says.

Really, in order for CFOs to effectively fulfill their “basic” job duties today, they must fully understand the increasingly competitive and complex nature of today’s business environment—a tough task when our technological and regulatory environments are in a constant state of change.

“These forces require a broad skill set to triage and identify where there is value and opportunity for investment and innovation and where the organization should focus its time,” Heath says. Right or wrong, organizations are increasingly being scrutinized for their decisions in these arenas, further heightening the visibility and significance of the CFO.

In short, “It’s tough out there!” Hinson says.

Mission Ready?

With such broad responsibilities, the question now becomes, can one truly prepare to be a CFO?

Those already on course for the C-suite would be well-served to actively build relationships across functions within their organizations, Heath says. “Sit with customer service to learn what customers need; meet with engineers to understand cutting edge technologies; work with marketing to help evaluate performance of a new campaign or branding exercise,” he encourages. “A strategic CFO must have a strong understanding of the undercurrent that drives the business if they hope to create and drive value.”

“Those who aspire to the position definitely need to pay their dues in accounting and finance first,” Charles suggests. “Work for an accounting firm; work in investment banking; work for large companies, small companies, and even go the route of an entrepreneur if you can.”

Point being, managing your career to get as much experience as possible is what’s needed first; because today’s CFOs have oversight and influence over the entire organization, they must have a broad background that spans functions as well as industries.

“Experience in a career can sometimes be referred to as scar tissue. Sometimes scars can be seen, and sometimes they can’t. The important takeaway is that scar tissue often teaches you what not to do as much as it teaches you what to do,” Charles says. “But remember, it takes a passion to build, grow, and preserve the value of a business.”